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23 April 2015

ACCC's Rod Sims warns of 'gaps' in cartel laws



Australia is at risk of corporate cartels because of gaps in the law that could stop companies being prosecuted, Australian Competition and Consumer Commission chairman Rod Sims says.

Mr Sims backed the recommendations of the Harper review into competition to crack down on cartel-like behaviour by companies, saying legal loopholes allowed "concerted practices" involving tacit collusion between competitors that fell short of an agreement.

Recent legal action in the Libor and Euribor case, taken by the European Commission against a large number of international banks, would not be possible in Australia, he said.

"In most advanced country competition law systems overseas, concerted practices are prohibited," Mr Sims will tell a Committee for the Economic Development of Australia lunch in Brisbane on Thursday.

"But a 'concerted practice' case against such conduct would not be possible in Australia. This gap in our laws can damage competition and so the proper functioning of our market economy."

The ACCC chairman also criticised supermarket chains Coles and Woolworths for acting like the Harper review's recommendations on section 46 of the Trade Practices Act were aimed at them.

"They are instead aimed at making an important law of general application workable. Any change will affect all sectors to the same extent," he said.

"Despite this, the supermarket sector has dominated the section 46 debate. For example, the two major supermarkets have argued that if the proposed changes to section 46 proceed, they risk breaching the law if they were to open a supermarket in a market where they do not currently operate.

"It is surprising that they would consider that introducing a new competitor into a market could somehow substantially lessen competition. Opening a new store in such circumstances is pro-competitive."

Mr Sims said there had been a "poorly informed" debate on section 46 following the Harper review recommendations.

He said the Harper recommendations did more than add an "effects test" to the current laws, which tend to focus on individual competitors rather than the wider competitive system.

"The Harper panel addressed these problems directly by recommending that the "take advantage" requirement be deleted, and that the target of the prohibition be conduct that has the purpose or effect of substantially lessening competition."

Mr Sims will also use his Brisbane speech to reiterate his concerns about state and federal government's privatisating assets without appropriate market structures or regulatory arrangements in place.

If done badly – such as the buyer of Sydney Airport being given the first right of refusal over any development of a second Sydney airport some years ago, and the recent sale of Port Botany and Port Kembla to the same owner – the results might turn voters off asset sales, he said.

"Otherwise we risk giving privatisation a bad name, because consumers will continue to associate privatisation with higher prices."

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